Murdoch's collapse

Print edition : August 12, 2011

The phone hacking scandal tears into the heart of his media empire, and the debris is still falling.

in London

Rupert Murdoch arrives at his Fifth Avenue residence in New York on July 20, a day after he appeared before a parliamentary committee in London in connection with the phone hacking scandal involving his now-defunct British tabloid News of the World.-LOUIS LANZANO/AP

LOOKING frail and nervous, he banged his fist on the desk in front of him and frequently asked for questions to be repeated before answering them mostly in monosyllables punctuated by long, pregnant pauses. Sitting behind him, his wife and his daughter looked even more nervous than the old man.

This was Rupert Murdoch on what he described as the most humble day of my life (July 19) when he appeared before the House of Commons Culture, Media and Sport Select Committee inquiring into the phone hacking scandal. Starting with News of the World (NoW), his favourite and Britain's best-selling tabloid, the scandal has engulfed his entire global media empire.

In an extraordinary double act, he and his son, James, chairman of his (once?) powerful British media group News International, took turns fielding questions from MPs. It was an extraordinary performance in denial, defiance and faux contrition: Yes, we're sorry for what happened and are determined to get to the bottom of it and win back people's trust.

But moi guilty? Non!

So, who they thought was responsible for what went on at NoW? MPs wanted to know.

The people I trusted to run it and maybe the people they trusted, Murdoch Sr replied while James nodded vigorously in agreement.

Former News of the World reporter Sean Hoare (at left in the picture), who blew the whistle on illegal news-gathering practices at the tabloid, was found dead at his home on July 18, but there appeared to be no suspicious circumstances, the police said.-MIGUEL MEDINA/AFP

A little later, it was the turn of News International's controversial former chief executive Rebekah Brooks (also a former NoW Editor) to explain her role in the squalid saga, which, more than everything else, has left her own career in tatters. Her answers echoed those of the Murdochs so closely that it seemed the trio may have been coached by the same PR consultant.

After four hours of two separate sittings, marked by a dramatic intervention by a stand-up comic who tried to throw a punch and a paper plate full of shaving foam at Murdoch Sr, all we had were more apologies and denials and certainly a huge amount of drama but nothing substantially new that we did not already know. Even Britain's normally creative headline writers struggled to come up with anything inventive the next morning and it was left to a Guardian cartoonist to capture the mood. The cartoon showed Murdoch Sr insisting: I know nothing! I just did what I was told!! And I'll slap anyone who says different!!! His son, sitting next to him, applauded.

So, where did it all go wrong for the Murdochs? Let us rewind.

Once upon a time, actually only until a few weeks ago, the Murdochs and Rebekah Brooks had the world at their feet with Britain's most powerful people vying for their company. And, then, suddenly it all started to come apart the rock-solid fortress they had built in East London collapsing like a house of cards as the hacking scandal tore at the very heart of Murdoch's media empire. The debris is still falling. More than two weeks after it exploded in the open, the crisis shows no sign of abating as new and dramatic developments resignations, arrests, suspicious deaths continue to dominate the headlines. Switch on the television and the latest Breaking News' is invariably about the hacking scandal. In a particularly murky turn, a former NoW journalist, Sean Hoare, who blew the whistle on illegal newsgathering practices at the newspaper was found dead at his house though at the time of writing there was no suggestion that his death was linked to his revelations. The police were treating it as unexplained but not thought to be suspicious.

Wapping, News International's imperious headquarters in London, has become a butt of jokes. Hackers' International, School for scandal and Murdoch academy for hackers are some of the milder and quotable epithets being used to describe it. In online chat rooms, people have suggested a new motto for NI: We hack all the news fit to hack.

Behind the jokes, however, there is serious concern about the implications of the scandal as much for Murdoch's global media business (it has been dubbed as his Enron moment) as for what it has revealed about the relationship between the press, the politicians and the police.

Successive generations of Tory and Labour politicians, frightened by the supposed power of his newspapers to influence their electoral fortunes, craved his patronage. It all started with Margaret Thatcher's Tory government, which helped Murdoch spread his wings in Britain by allowing him to buy The Times and The Sunday Times in 1981 in return for his support. They came to be known as soulmates. John Major, her successor, picked up where she left off; and this, as The Guardian columnist Jackie Ashley reminded us, was followed by Tony Blair's shameless political flirting with Murdoch. On the eve of the 1997 elections, the then Labour leader famously flew half way round the world to Australia to meet the media mogul to win his support. Murdoch was sufficiently impressed to switch his newspapers' support from the Tories to Labour.

Former News International chief executive Rebekah Brooks. She was editor of News of the World when its journalists hacked into the phones of hundreds of people.-REUTERS TV

Blair's team regarded Murdoch's support with awe. That's when Murdoch's summer parties became the places to be seen, Jackie Ashley wrote.

Likewise, David Cameron, when in opposition, assiduously cultivated Murdoch and his press going to the extent of hiring a former NoW editor, Andy Coulson, to run his Tory party's media operations. He later brought him to Downing Street as his communications chief despite being warned about his alleged role in hacking by NoW journalists. Coulson was forced to leave No. 10 in January amid fresh revelations about happenings during his time at NoW. He was arrested recently and is out on bail. Official records released by the government show that Cameron met as many as 26 top Murdoch executives since moving into Downing Street 15 months ago. James Murdoch and Rebekah Brooks stayed at the Prime Minister's official weekend retreat, Chequers. He also met them socially separately, including at a Christmas dinner hosted by Rebekah Brooks. Murdoch Jr was also present.

While Cameron also met journalists and officials from other newspapers, significantly he had the maximum number of meetings with those from the Murdoch group.

The 26 meetings or events involving News International figures compares with nine involving Telegraph Media Group figures; four meetings involving Associated Newspapers, publisher of Daily Mail and Mail on Sunday; four meetings involving Evening Standard, the BBC pointed out.

In the wake of the scandal, however, Murdoch is being seen as an embarrassment. Suddenly there is a scramble among politicians, including Cameron, to distance themselves from him. There is even brave talk of breaking up his media monopoly. The Economist noted in an editorial headlined An empire at bay: Only a couple of weeks ago, Mr Murdoch's papers, which have around two-fifths of Britain's national print market, gave him extraordinary access to the same politicians who now all condemn him as evil incarnate. Elsewhere it noted that a once-feared colossus has become a pantomime villain, hissed from the stage.

The scandal has also revealed the cosy relationship that existed between the police and the Murdoch empire. Scotland Yard's top man, Paul Stephenson, and another senior police commissioner were forced to resign over their links with News International journalists, and more heads could roll amid accusations that officers took bribes to provide information to Murdoch-owned publications. A judicial inquiry is to look into the press-police-politician nexus.

Lying beneath the wreckage piling up at Wapping are yellowing pages of the 168-year-old NoW, which Murdoch shut down hoping that getting rid of the source of the problem would draw a line under the crisis. But as former Labour Deputy Prime Minister John Prescott pointed out, when the entire body is diseased simply chopping off one part would not contain the infection.

Other bodies buried under the debris include Murdoch's cherished 8-billion bid for the takeover of the satellite broadcaster British Sky Broadcasting (BSkyB), a deal he desperately needed to cement his dominance of British media. He was forced to abandon it following intense public and political pressure. In the light of the hacking scandal, he was not regarded as a fit and proper person to run it. Critics also argued that he already had a near monopoly of Britain's media market and handing him BSkyB would destroy whatever remained of media plurality. The Guardian called the decision to abandon the deal as the biggest single reverse of Murdoch's mercurial career.

Andy Coulson, a former editor of NoW. He was picked as Prime Minister David Cameron's director of communications but resigned following the phone hacking scandal.-OLI SCARFF/AP

A big casualty was Rebekah Brooks, who had to go despite the full backing of her boss. When Murdoch flew into London to take control of the hacking crisis, he was asked by journalists what his priority would be. He gestured to Rebekah Brooks and said: This one. She was NoW's editor when phones of hundreds of people, including that of a murdered teenaged schoolgirl Milly Dowler, were hacked into by its journalists for stories.

Rebekah Brooks clung on to her job until push came to shove and investors warned that she was becoming a liability to the company. Prince Alwaleed bin Talal Al Saud, the second biggest shareholder in News Corporation, bluntly told the BBC: I will not accept to deal with a company that has a lady or a man that has any sliver of doubts on her or his integrity.

As pressure grew, she quit, owning responsibility for the people we have hurt but insisting that she was not aware of any wrongdoing under her watch. She said she was resigning because she had become the focal point of the debate, which was distracting from efforts to fix the problems of the past. A few days later, she was arrested on suspicion of corruption and conspiracy to intercept communications. She is the most high-profile figure to be arrested in the case so far.

The full scale of the scandal is still unfolding with each new day bringing ever more damaging revelations. Its ripples are being felt across the Atlantic. In America, the Federal Bureau of Investigation (FBI) has launched an investigation into allegations that phones of 9/11 victims may have been hacked into, and there have been calls for a criminal probe into the business practices of Murdoch's companies.

Two weeks after the scandal broke, this was the withering assessment of Murdoch's own newspaper The Times: Almost two long weeks have passed since it was revealed that Milly Dowler's phone had been hacked into, during which News International has scrambled to come up with an adequate response. Indeed, it took too long to appreciate the gravity of the crisis in which it was engulfed. The scale of the crisis can be measured by the scale of the consequences so far. In the short history of the crisis, News of the World has been closed after 168 years' publishing; nine people including a former editor of the newspaper, have been arrested; News Corp's bid for... BSkyB... has been withdrawn; and now the chief executive of the company has resigned her position, as has her predecessor, Les Hinton, CEO of Dow Jones, publisher of The Wall Street Journal.

It has been dubbed Murdoch's Watergate with acts of law-breaking being compounded by allegations of a cover-up. Hundreds of incriminating e-mails, the so-called smoking guns, are alleged to have been destroyed by News International executives. The police allege that the company attempted to thwart and obstruct their investigation.

On the basis of what is publicly known so far, there appeared to have been a culture of systematic abuse of law and media ethics. Up to 4,000 people may have had their phones hacked into in a fishing expedition for stories. Among them were families of the victims of the 2005 London bombings and soldiers killed in Iraq and Afghanistan. Not even children were spared as the case of Milly Dowler showed. The claim that the practice was confined to a few rogue reporters has become untenable in the light of new disclosures. Nor was it restricted to NoW alone. The Sun and The Sunday Times, it has emerged, used dubious methods to obtain personal information about former Prime Minister Gordon Brown.

The crisis has transformed attitudes towards Murdoch, and many are wondering whether it is the beginning of the end of his British media empire. A senior Tory figure has been quoted as saying: There were three things I never thought I'd live to see: the fall of the Berlin Wall; the end of white rule in South Africa; and the collapse of Rupert Murdoch's power.

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